Delusion and Deception in Large Infrastructure Projects: Two Models for Explaining and Preventing Executive Disaster

By Bent Flyvbjerg, Massimo Garbuio, Dan Lovallo. 2009

435 citations recorded by the source corpus.

"Over budget, over time, over and over again" appears to be an appropriate slogan for large, complex infrastructure projects. This article explains why cost, benefits, and time forecasts for such projects are systematically over-optimistic in the planning phase. The underlying reasons for forecasting errors are grouped into three categories: delusions or honest mistakes; deceptions or strategic manipulation of information or processes; or bad luck. Delusion and deception have each been addressed in the management literature before, but here they are jointly considered for the first time. They are specifically applied to infrastructure problems in a manner that allows both academics and practitioners to understand and implement the suggested corrective procedures. The article provides a framework for analyzing the relative explanatory power of delusion and deception. It also suggests a simplified framework for analyzing the complex principal-agent relationships that are involved in the approval and construction of large infrastructure projects, which can be used to improve forecasts. Finally, the article illustrates reference class forecasting, an outside view de-biasing technique that has proven successful in overcoming both delusion and deception in private and public investment decisions.

Subfields: Civil and Structural Engineering, Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/ee847ae0dbc25b3217ec4d9a402abc98bdaabcd8

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In Civil and Structural Engineering

In Management Science and Operations Research

Citations in the corpus

Human resource management practices and project success, a moderating role of Islamic Work Ethics in Pakistani project-based organizations (2015, background): “Thus far, these researches have been least rewarding because in-spite of a lot of research on ingredients of project success (Judgev and Muller, 2005), the number of successful projects is alarmingly small (Flyvbjerg et al., 2009).”
Top Ten Behavioral Biases in Project Management: An Overview (2021, background): “This was the object of later publications (Flyvbjerg, 2006; Flyvbjerg, 2013; Flyvbjerg et al., 2004; Flyvbjerg et al., 2009; Flyvbjerg et al., 2016).”
Quality Control and Due Diligence in Project Management: Getting Decisions Right by Taking the Outside View (2013, background): “Being academic, the theories use more polite and opaque language, needless to say, describing Taleb's fools as people who are subject to “optimism bias” and the “planning fallacy” and liars as those practicing “strategic misrepresentation,” “agency,” and the “conspiracy of optimism” (Flyvbjerg et al”
Social responsibility of major infrastructure projects in China (2015, background): “Many themes are involved, such as decision making, risk management, multi-project synergy and life-cycle cost (Flyvbjerg et al., 2009; Miller and Lessard, 2000; Priemus et al., 2008).”
Should We Build More Large Dams? The Actual Costs of Hydropower Megaproject Development (2014, background): “Second, optimistic judgments are often exacerbated by deception, i.e. strategic misrepresentation by project promoters (Wachs, 1989; Pickrell, 1992; Flyvbjerg et al., 2002, 2005, 2009).”